agile group holdings limitedhighlights financial highlights for the six months ended 30 june 2018...
TRANSCRIPT
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Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no
responsibility for the contents of this announcement, make no representation as to its accuracy or
completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in
reliance upon the whole or any part of the contents of this announcement.
AGILE GROUP HOLDINGS LIMITED (Incorporated in the Cayman Islands with limited liability)
(Stock Code: 3383)
ANNOUNCEMENT OF INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2018
HIGHLIGHTS
Financial Highlights
For the six months
ended 30 June
2018 2017 Change
Revenue (RMB million) 24,206 22,315 +8.5%
Gross profit (RMB million) 12,018 8,324 +44.4%
Profit for the period (RMB million) 4,280 2,306 +85.6%
Profit attributable to shareholders of the
Company (RMB million) 3,759 1,859 +102.2%
Basic earnings per share (RMB) 0.968 0.479 +102.1%
Interim Dividend per share (HK cents) 50.0 22.0 +127.3%
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Operational Highlights
During the Review Period, accumulated pre-sales value of the Group, together with its
joint ventures and associates, was RMB46,550 million. The performance was in line with
expectation. The accumulated GFA pre-sold was 3.551 million sq.m., and the
corresponding average selling price was RMB13,107 per sq.m.. During the Review
Period, the Group, together with its joint ventures and associates, had in total 83 projects
available for sale, including 11 newly launched projects.
During the Review Period, the Group’s revenue was RMB24,206 million, representing
an increase of 8.5% when compared with the corresponding period of last year. The
Group’s revenue from recognised sales of property development reached RMB22,552
million, representing an increase of 5.7% when compared with the corresponding period
of last year.
During the Review Period, the overall gross profit margin and net profit margin of the
Group were 49.6% and 17.7% respectively, representing an increase of 12.3 percentage
points and 7.4 percentage points respectively when compared with the corresponding
period of last year.
During the Review Period, the Group’s revenues from property management and hotel
operations increased by 67.5% and 8.2% respectively when compared with the
corresponding period of last year, providing stable income for the Group.
During the Review Period, the Group was dedicated to expanding its nationwide presence
through strategically acquiring 30 new land parcels successively in multiple city clusters
by means of tender, auction, listing-for-sale and acquisition, with an estimated total
planned GFA of 5.57 million sq.m., of which the Group’s total attributable planned GFA
was 4.63 million sq.m.. The consideration payable was RMB20,300 million. As at 30
June 2018, the Group had a land bank with a total planned GFA of 35.40 million sq.m. in
69 cities and districts (Among these, 16 cities are newly explored markets).
The spin-off and separate listing of A-Living on the Main Board of Hong Kong Stock
Exchange was completed during the Review Period.
During the Review Period, the Group successfully issued an aggregate of USD600 million
senior perpetual capital securities, obtained a 4-year term loan comprising HK$8,834
million (with a greenshoe option of HK$2,500 million) and USD200 million and entered
into RMB4,600 million Commercial Mortgage Backed Securities effectively optimising
its debt structure. During the Review Period, Moody’s Investors Service, Inc. and S&P
Global Ratings have raised the corporate credit ratings of the Group to “Ba2” and “BB”
respectively, both with a “Stable” outlook.
As at 30 June 2018, the total cash and bank balances of the Group were RMB29,508
million.
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CHAIRMAN’S STATEMENT
Dear shareholders,
I am pleased to report the interim results of Agile Group Holdings Limited (“Agile” or the
“Company”) and its subsidiaries (collectively, the “Group”) for the six months ended 30 June
2018 (“Review Period”).
Results and dividends
For the Review Period, the revenue of the Group was RMB24,206 million, representing an
increase of 8.5% when compared with the corresponding period of last year. The Group’s gross
profit and profit for the period were RMB12,018 million and RMB4,280 million respectively,
representing an increase of 44.4% and 85.6% when compared with the corresponding period of
last year. Overall gross profit margin and net profit margin were 49.6% and 17.7% respectively,
representing an increase of 12.3 percentage points and 7.4 percentage points when compared
with the corresponding period of last year. Profit attributable to shareholders of the Company
was RMB3,759 million, representing a significant increase of 102.2% when compared with the
corresponding period of last year.
The board of directors of the Company (the “Board”) has declared an interim dividend of HK50.0
cents per ordinary share for the six months ended 30 June 2018 (six months ended 30 June 2017:
HK22.0 cents).
Business review Since the Central Government emphasised on the positioning of “housing is for living in but not
for speculation”, local governments have introduced a number of policies in succession to
regulate the property market on the principle of “Differentiated Control and City-specific
Policies”. In the first half of 2018, the majority of cities still maintained consistent and stable
policies, which enabled the steady growth of the property market of Mainland China. In this
stable and orderly market environment, the Group continued to adjust its marketing strategies
flexibly and launched projects in a timely manner at reasonable prices. In addition, the Group
was committed to implementing the business model of “focusing on property development,
supported by a diversified range of businesses”, thereby obtaining encouraging results in a
number of segments.
Steady growth of property business and outstanding performance in property management
business
In respect of property development business, the accumulated pre-sales value of the Group
including joint ventures and associates amounted to RMB46,550 million. The accumulated GFA
pre-sold and average selling price were 3.551 million sq. m. and RMB13,107 per sq. m.
respectively.
The spin-off and separate listing of A-Living Services Co., Ltd. (“A-Living”, a subsidiary of the
Group) on the Main Board of Hong Kong Stock Exchange was successfully completed on 9
February 2018. During the Review Period, the revenue of A-Living was RMB1,406 million,
representing an increase of 103.1% when compared with the corresponding period of last year.
A-Living recorded strong financial performance, with its net profit and profit attributable to
shareholders growing significantly by 174.0% and 196.3% respectively when compared with the
corresponding period of last year.
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Strategic replenishment of land bank to drive sustainable development of property business
Being fully aware that land bank is an important cornerstone for the sustainable development of
a property developer, the Group has been replenishing its land bank by way of tender, auction,
listing-for-sale and equity acquisition. During the Review Period, the Group continued to adopt
an active yet prudent land acquisition strategy with a focus on city clusters, and acquired 30 new
projects in cities including those in the Pearl River Delta, Yangtze River Delta, Beijing-Tianjin-
Hebei, Chengdu-Chongqing and the Central Plain clusters. Among these, Meizhou, Shantou and
Yunfu in Southern China Region, Fuzhou, Hefei, Huzhou, Jiaxing, Lianyungang, Wuhu and
Xuzhou in Eastern China Region, Hanzhong in Western China Region, Jingzhou, Shangqiu and
Xuchang in Central China Region and Handan and Jinzhong in Northern China Region are newly
explored markets. The total planned GFA of the newly acquired land was approximately 5.57
million sq. m., in which the Group’s total attributable planned GFA was approximately 4.63
million sq. m.. The consideration payable by the Group was approximately RMB20,300 million.
As at 30 June 2018, the Group had an aggregate land bank with a total planned GFA of 35.40
million sq. m. in 69 cities and districts. Of these, 10.81 million sq. m. were located in the
“Guangdong-Hong Kong-Macao Greater Bay Area” which is strongly promoted by the Central
Government. This land bank accounts for 30.5% of the overall land bank, indicating tremendous
potential for future development.
Building new business segments and successful implementation of diversification strategy
During the Review Period, the Group made all efforts to expand its property development,
property management, environmental protection and construction businesses on the back of the
business model of “focusing on property development, supported by a diversified range of
businesses”. New business segments including real estate construction management and
commercial were also established, marking further implementation of the Group’s diversification
development.
In respect of property management business, A-Living continued to implement the dual-branded
development strategy with the support of its two strategic shareholders, namely the Group and
Greenland Holdings Group Company Limited (“Greenland Holdings”). As at 30 June 2018, the
accumulated contracted GFA granted to A-Living by Greenland Holdings according to the
mutual agreement amounted to 18.8 million sq. m.. On 9 April 2018, A-Living also entered into
an equity transfer agreement with Nanjing Zizhu Property Management Co., Ltd. (“Nanjing
Zizhu”), one of the top five leading property management companies in Jiangsu Province, to
acquire 51% equity interest in Nanjing Zizhu, with a view to accelerating its market expansion
and further reinforcing its market position in Eastern China Region. During the Review Period,
A-Living extended its presence to 27 provinces, municipalities and autonomous regions in China
through strategies such as market expansion, investment, mergers and acquisitions (“M&A”).
The GFA under management reached 109 million sq. m., and the number of management projects
exceeded 420.
In respect of environmental protection business, the Group was committed to driving the business
of hazardous waste treatment during the Review Period and obtained excellent operating results
in every project. The Group also actively optimised its regional presence and successfully
expanded into the industry of domestic waste-to-energy. The number of projects under the
environmental protection business, including 28 hazardous waste treatment projects, 2 domestic
waste treatment projects and 3 water plant projects, reached 33, of which 13 projects have
commenced operation. The business has established presence in 23 cities. In the meantime, the
maximum processing capacity of all hazardous waste treatment projects under the environmental
protection business exceeded 2 million tonnes per year. The total capacity of its safety landfill
site was over 12 million cubic metres, while the maximum processing capacity of the newly
developed domestic waste-to-energy projects reached approximately 1,800 tonnes per day.
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In respect of education business, the education team is committed to providing ancillary facilities
of pre-school education, primary and secondary education, tertiary education, training education
and international education, adding value to the property projects while creating synergies with
the property development business.
In respect of construction business, the construction team completed business integration during
the Review Period. The integrated construction business has been diversified, with the general
construction contracting, landscaping and home decoration as its “principal business”; the design
consulting and materials trading as its “ancillary business”, and the turnkey furnishing and
construction maintenance as its “innovative business”. Having obtained important qualification
certificates for First-class General Construction Contracting, First-class Renovation Project and
Grade A Architectural Design, the construction business established a “construction
standardisation” system, thereby laying a solid foundation for future development.
The newly established real estate construction management business is an asset-light business,
which primarily provides managed services to owners and customers with the support of
resources across the whole industry chain. The business focuses on projects located in Tier-3 and
Tier-4 cities with high prices, low liabilities and clear shareholding structures. At present, the
real estate construction management business has 2 projects under construction and 3 project
framework agreements in place, with its development progressing as anticipated.
The newly established commercial business has integrated the former business of hotel
operations and property investment, and introduced a diversified range of commercial projects
covering community retail, cultural and tourism retail, shopping centre and the long-term rental
apartment brand –“Agile Apartment”, with a view to enhancing its asset value. During the
Review Period, the commercial team also continued to improve its internal management, and
carried out works to upgrade and optimise hotel and commercial projects. As a result, a
satisfactory overall performance was recorded.
Diversified financing channels to support overall business development
In order to provide strong support to its overall business development, the Group continued to
accelerate its sales turnover, strengthen capital and budget management, and optimise cost and
expenditure control. The Group also sought to strike a balance between financial management
and business development through diversified financing channels. During the Review Period, the
Group issued USD500 million senior perpetual capital securities and USD100 million senior
perpetual capital securities on the offshore front, and entered into a syndicated loan agreement
with a number of banks in relation to the loans of HK$8,834 million (with a greenshoe option of
HK$2,500 million) and USD200 million with a term of 4 years. A PRC subsidiary of the Group
engaged in property development entered into a Commercial Mortgage Backed Securities with
an assets management company on the onshore front, with an aggregated nominal value of
RMB4,600 million and a term of 3 years, of which RMB500 million was the subordinated
securities purchased by the PRC subsidiary as an original equity holder.
During the Review Period, Moody’s Investors Service, Inc. and S&P Global Ratings also raised
their credit ratings on the Group to “Ba2” and “BB”, both with a “Stable” outlook.
Multi-channel mutual communication and improved transparency
The Group always values corporate transparency and upholds the concept of “mutual
communication for a win-win situation”. Subject to the requirements of the Listing Rules and
relevant laws, the Group maintains close and effective mutual communication and builds good
relationships with commercial banks, investment banks, rating agencies, investors and analysts,
thereby improving its corporate transparency on an on-going basis.
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During the Review Period, the Group communicated and met with around 1,000 investors and
analysts by organising results announcement presentations, conducting 10 roadshows, attending
17 investor conferences or seminars held by investment banks or securities companies at home
and abroad and arranging 40 project site visits.
Driving sustainable community development and performing corporate social
responsibilities
In respect of driving the sustainable development of communities, the Group upholds the belief
of “benefiting from society, giving back to society” at all times and makes all efforts to facilitate
the sound growth of the communities where it operates. The Group not only promotes Chinese
culture, but also actively supports and participates in charity and community activities related to
environmental protection, medical care, education, culture and sports. In addition, the Group
acted as the principal sponsor of “30-Hour Famine” in Hong Kong and “Macau Famine” in
Macau organised by the World Vision Hong Kong for the ninth consecutive year, striving to
contribute to society. During the Review Period, charitable donations of the Group amounted to
RMB14 million.
Future prospects
Looking ahead, the economic foundation of China remains solid in the second half of 2018 as
the state continues to drive the economic and financial reform further and promotes the
development of urbanisation, with a strategic focus on policies related to the “Greater Bay Area”.
The property market of Mainland China is also expected to grow at a steady pace. Against this
background, the Group will further implement the business model of “focusing on property
development, supported by a diversified range of businesses” and make all efforts to carry out
its “Three-year Plan”, with an aim to drive the development of each of its business segments to
the fullest extent.
In respect of property development business, the Group will capitalise on market opportunities
to achieve continuous development and launch projects in a timely manner to meet the strategic
goal of “increasing profit, expanding scale and reinforcing brand”. The Group will also
endeavour to meet its full-year pre-sales target by improving the quality of its products,
increasing operational efficiency and improving its staff training system.
In respect of property management business, the Group will continue to increase market
penetration, expand into new markets, further increase the GFA under management and boost
revenue from operations through full-range market expansion, investment, M&A and joint
venture cooperation.
In respect of environmental protection business, the Group will strive to speed up the acquisition
of well-established and quality projects with stable operating revenue, further enhance its project
capacity and facilitate project development, so as to drive its revenue and profit growth.
In respect of education business, the Group will actively drive the construction of new schools,
with a view to enhancing value of property projects.
In respect of construction business, the Group will continue to drive the growth of general
construction contracting business and further enhance the quality of design and services. While
delivering support to the property development business, the team will accelerate business
diversification, expand the business scale and establish a benchmark for the industry.
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In respect of real estate construction management business, the Group will seize market
opportunities through strategic expansion into Tier-1 and Tier-2 cities, with an aim to create more
profit growth points.
In respect of commercial business, the Group will further enhance its internal management
capabilities, strengthen the control of costs and expenses, accelerate the revenue growth of new
businesses, and make all efforts to drive the business diversification.
The Group is fully confident in the future development of Mainland China and the Company. In
face of the fast-changing economic and market environment, the Group will remain vigilant in
peacetime as always. The Group will continue to enhance the establishment of systems, drive
standardised management of the Company and enhance risk control. The Group will improve the
establishment and management of its talent system to cater for the needs of the diversified
development of the Company. Meanwhile, the Group will enhance brand management, improve
the quality of its products and services, with a view to creating greater value for customers,
shareholders, employees and society while building Agile into a century-long enterprise.
Acknowledgement
On behalf of the Board, I would like to extend our heartfelt gratitude towards our shareholders,
customers and stakeholders for their enormous support, as well as our staff members for their
dedicated efforts, with which we managed to facilitate the diversified development of Agile.
CHEN Zhuo Lin
Chairman and President
Hong Kong, 29 August 2018
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RESULTS
Unaudited interim results for the six months ended 30 June 2018:
INTERIM CONSOLIDATED INCOME STATEMENT
Six months ended 30 June
2018 2017
Note Unaudited Unaudited
(RMB’000) (RMB’000)
Revenue 3 24,205,780 22,314,770
Cost of sales (12,187,897) (13,990,852)
Gross profit 12,017,883 8,323,918
Selling and marketing costs (1,030,848) (822,518)
Administrative expenses (1,046,619) (738,711)
Other gains/(losses), net 4 314,344 (49,011)
Other income 5 372,917 238,959
Other expenses (54,024) (89,331)
Operating profit 10,573,653 6,863,306
Finance costs, net 6 (853,269) (298,696)
Share of post-tax gains/(losses) of associates 48,418 (23,205)
Share of post-tax losses of joint ventures (99,163) (73,357)
Profit before income tax 9,669,639 6,468,048
Income tax expenses 7 (5,389,298) (4,161,956)
Profit for the period 4,280,341 2,306,092
Profit attributable to:
Shareholders of the Company 3,758,948 1,858,688
Holders of Perpetual Capital Securities 287,316 241,116
Non-controlling interests 234,077 206,288
4,280,341 2,306,092
Earnings per share attributable to the shareholders of the Company for the period
(expressed in Renminbi per share)
- Basic 8 0.968 0.479
- Diluted 8 0.968 0.479
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INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
Six months ended 30 June
2018 2017
Unaudited Unaudited
(RMB’000) (RMB’000)
Profit for the period 4,280,341 2,306,092
Other comprehensive income for the period
Items that may be reclassified to profit or loss
- Currency translation differences 491 (5,857)
Other comprehensive income for the period, net of tax 491 (5,857)
Total comprehensive income for the period 4,280,832 2,300,235
Total comprehensive income attributable to:
Shareholders of the Company 3,758,661 1,853,448
Holders of the Perpetual Capital Securities 287,316 241,116
Non-controlling interests 234,855 205,671
4,280,832 2,300,235
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INTERIM CONSOLIDATED BALANCE SHEET
As at
As at
30 June
2018
31 December
2017
─────── ─────
Note Unaudited Audited
(RMB’000) (RMB’000)
ASSETS
Non-current assets
Property, plant and equipment 7,969,202
7,573,037
Land use rights 2,087,531
2,073,655
Investment properties 10 5,755,346
5,886,604
Intangible assets 263,957
155,278
Goodwill 1,545,748
1,303,095
Interests in associates 624,639
567,221
Interests in joint ventures 7,278,884
6,438,514
Financial assets at fair value through profit or loss 117,500 -
Properties under development 19,442,970 17,826,344
Prepayments for acquisition of equity interests 320,854
1,078,421
Receivables from related parties 11 13,418,487 6,547,559
Available-for-sale financial assets - 277,500
Deferred income tax assets
919,362
986,760
59,744,480 50,713,988
Current assets
Financial assets at fair value through profit or loss 3,925,358 1,204,478
Contract assets 415,986 -
Properties under development 61,947,370
46,990,187
Completed properties held for sale 8,476,959
9,915,913
Prepayments for acquisition of land use rights 7,404,759
5,762,937
Trade and other receivables 11 21,779,850
16,396,483
Prepaid income taxes
3,697,703
2,253,557
Restricted cash 11,334,702
11,078,175
Cash and cash equivalents 18,172,878
19,041,948
137,155,565 112,643,678
Total assets 196,900,045
163,357,666
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INTERIM CONSOLIDATED BALANCE SHEET (Continued)
As at
As at
30 June
2018
31 December
2017
────── ──────
Note Unaudited Audited
(RMB’000) (RMB’000)
EQUITY
Capital and reserves attributable to the
shareholders of the Company
Share capital and premium 3,421,883
3,421,883
Shares held for Share Award Scheme (156,588)
(156,588)
Other reserves 2,489,098
785,400
Retained earnings 33,641,574
32,284,542
39,395,967 36,335,237
Perpetual Capital Securities 8,285,708
5,529,424
Non-controlling interests 4,563,321
2,311,569
Total equity 52,244,996
44,176,230
LIABILITIES
Non-current liabilities
Borrowings 45,452,348 34,529,004
Derivative financial instruments - 4,403
Deferred income tax liabilities 1,189,447 1,174,595
46,641,795
35,708,002
Current liabilities
Borrowings 29,855,683
27,146,235
Contract liabilities 28,867,050
-
Advanced proceeds received from customers -
19,460,971
Trade and other payables 12 25,275,281
23,263,952
Derivative financial instruments 115,073 240,845
Current income tax liabilities 13,900,167
13,361,431
98,013,254
83,473,434
Total liabilities 144,655,049
119,181,436
Total equity and liabilities 196,900,045 163,357,666
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Notes :
1 Basis of preparation
This condensed consolidated interim financial information for the six months ended 30 June
2018 has been prepared in accordance with Hong Kong Accounting Standard 34 “Interim
Financial Reporting”. The condensed consolidated interim financial information should be
read in conjunction with the annual consolidated financial statements for the year ended 31
December 2017 and any public announcement made by the company during the six months
ended 30 June 2018, which have been prepared in accordance with Hong Kong Financial
Reporting Standards (“HKFRS”) issued by the Hong Kong Institute of Certified Public
Accountants.
2 Accounting policies
The accounting policies adopted are consistent with those of the previous financial year and
corresponding interim reporting period, except for the adoption of new and amended
standards as set out below.
(a) New and amended standards adopted by the Group
A number of new or amended standards became applicable for the current reporting
period and the Group had to change its accounting policies as a result of adopting
the following standards:
HKFRS 9 Financial Instruments HKFRS 15 Revenue from Contracts with Customers HKFRS 1 (Amendment) First Time Adoption of HKFRS 1 HKFRS 2 (Amendment) Classification and Measurement of Share-based Payment Transactions HKFRS 4 (Amendment) Applying HKFRS 9 Financial Instruments with HKFRS 4 Insurance Contracts HKAS 28 (Amendment) Investments in Associates and Joint Ventures HKFRS 40 (Amendment) Investments in Investment property HK (IFRIC) 22 Foreign Currency Transactions and Advance Consideration
The adoption of the new and amended standards does not have significant impact
on the condensed consolidated interim financial information except for HKFRS 9
and HKFRS 15. Please refer to note 2(c) below.
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2 Accounting policies (continued)
(b) New and amendments to existing standards have been issued but are not
effective for the financial year beginning on 1 Janauray 2018 and have not been
early adopted by the Group
Effective for accounting
periods beginning on or
after
HKFRS 16 Leases 1 January 2019
HK (IFRIC) 23 Uncertainty over Income Tax Treatments 1 January 2019
Amendments to HKFRS 10 and HKAS 28 Sale or
contribution of assets between an investor and its
associate or joint venture To be determined
The Group has already commenced an assessment of the impact of these new or
revised standards, interpretation and amendments, certain of which are relevant to
the Group’s operations. According to the preliminary assessment made by the
Directors, no significant impact on the financial performance and position of the
Group is expected when they become effective except for HKFRS 16.
(c) Changes in accounting policies
This note explains the impact of the adoption of HKFRS 9 Financial Instruments
and HKFRS 15 Revenue from Contracts with Customers on the Group’s financial
statements and also discloses the new accounting policies that have been applied
from 1 January 2018, where they are different to those applied in prior periods.
(i) Impact on the financial statements
The Directors of the Group consider that the changes in the Group’s accounting
policies do not have any material impacts on prior year financial statements.
(ii) HKFRS 9 Financial Instruments – Impact of adoption
HKFRS 9 replaces the provisions of HKAS 39 that relate to the recognition,
classification and measurement of financial assets and financial liabilities,
derecognition of financial instruments, impairment of financial assets and hedge
accounting.
The adoption of HKFRS 9 Financial Instruments from 1 January 2018 resulted in
changes in accounting policies and adjustments to the amounts recognised in the
financial statements. The new accounting policies are set out in note 2(c)(iv) below.
The effects of the adoption of HKFRS 9 are as follows:
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2 Accounting policies (continued)
(c) Changes in accounting policies (continued)
(ii) HKFRS 9 Financial Instruments – Impact of adoption (continued)
Classification and measurement
On 1 January 2018 (the date of initial application of HKFRS 9), the Group’s
management has assessed which business models apply to the financial assets held
by the Group and has classified its financial instruments into the appropriate HKFRS
9 categories. The main effect resulting from this reclassification is as follows:
Financial assets – 1 January 2018 Notes
Fair value through
profit and loss
(“FVPL”)
Closing balance at 31 December 2017 - HKAS 39 1,204,478
Reclassify investments from available-for-sale financial
assets to FVPL (a) 277,500
Opening balance at 1 January 2018 - HKFRS 9 1,481,978
Note:
(a) Reclassification from available-for-sale financial assets to FVPL
The amounts represent the equity interests in certain non-listed companies in the
PRC. They do not meet the HKFRS 9 criteria for classification at amortised cost,
because their cash flows do not represent solely payments of principal and interest.
(iii) Impairment of financial assets
The Group has three types of financial assets that are subject to HKFRS 9’s new
expected credit loss model:
• trade receivables for sales of property development and from the provision of
management services and other services
• contract assets relating to property development
• other financial assets at amortised cost
While cash and cash equivalents are also subject to the impairment requirements of
HKFRS 9, the identified impairment loss was immaterial.
The Group was required to revise its impairment methodology under HKFRS 9.
The Directors of the Group consider that there is no material impact of the change
in impairment methodology on the Group’s retained earnings and equity.
15
2 Accounting policies (continued)
(c) Changes in accounting policies (continued)
(iv) HKFRS 9 Financial Instruments – Accounting policies applied from 1 January 2018
(continued)
Investments and other financial assets
Classification
From 1 January 2018, the Group classifies its financial assets in the following
measurement categories:
• those to be measured subsequently at fair value (either through other
comprehensive income, or through profit or loss), and
• those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial
assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or
loss or other comprehensive income. For investments in equity instruments that are
not held for trading, this will depend on whether the Group has made an irrevocable
election at the time of initial recognition to account for the equity investment at fair
value through other comprehensive income (FVOCI).
The Group reclassifies debt investments when and only when its business model for
managing those assets changes.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in
the case of a financial asset not at fair value through profit or loss (FVPL), transaction
costs that are directly attributable to the acquisition of the financial asset. Transaction
costs of financial assets carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when
determining whether their cash flows are solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business
model for managing the asset and the cash flow characteristics of the asset. There are
three measurement categories into which the Group classifies its debt instruments:
• Amortised cost: Assets that are held for collection of contractual cash flows where
those cash flows represent solely payments of principal and interest are measured
at amortised cost. Interest income from these financial assets is included in finance
income using the effective interest rate method. Any gain or loss arising on
derecognition is recognised directly in profit or loss and presented in other
gains/(losses), together with foreign exchange gains and losses. Impairment losses
are presented as separate line item in the statement of profit or loss.
16
2 Accounting policies (continued)
(c) Changes in accounting policies (continued)
(iv) HKFRS 9 Financial Instruments – Accounting policies applied from 1 January 2018
(continued)
Investments and other financial assets (continued)
Debt instruments (continued)
• FVOCI: Assets that are held for collection of contractual cash flows and for selling
the financial assets, where the assets’ cash flows represent solely payments of
principal and interest, are measured at FVOCI. Movements in the carrying amount
are taken through other comprehensive income, except for the recognition of
impairment gains or losses, interest revenue and foreign exchange gains and losses
which are recognised in profit or loss. When the financial asset is derecognised,
the cumulative gain or loss previously recognised in other comprehensive income
is reclassified from equity to profit or loss and recognised in other gains/(losses).
Interest income from these financial assets is included in finance income using the
effective interest rate method. Foreign exchange gains and losses are presented in
other gains/(losses) and impairment expenses are presented as separate line item
in the statement of profit or loss.
• FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are
measured at FVPL. A gain or loss on a debt investment that is subsequently
measured at FVPL is recognised in profit or loss and presented net within other
gains/(losses) in the period in which it arises.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the
Group’s management has elected to present fair value gains and losses on equity
investments in other comprehensive income, there is no subsequent reclassification of
fair value gains and losses to profit or loss following the derecognition of the
investment. Dividends from such investments continue to be recognised in profit or
loss as other income when the Group’s right to receive payments is established.
Changes in the fair value of financial assets at FVPL are recognised in other
gains/(losses) in the statement of profit or loss as applicable. Impairment losses (and
reversal of impairment losses) on equity investments measured at FVOCI are not
reported separately from other changes in fair value.
Impairment
For trade and other receivables, the Group applies the simplified approach permitted
by HKFRS 9, which requires expected lifetime losses to be recognised from initial
recognition of the receivables.
17
2 Accounting policies (continued)
(c) Changes in accounting policies (continued)
(v) HKFRS 15 Revenue from Contracts with Customers – Accounting for property
development activities
The Group has adopted HKFRS 15 Revenue from Contracts with Customers from 1
January 2018 which resulted in changes in accounting policies.
Impact on financial statements
Under HKFRS 15, for properties that have no alternative use to the Group due to
contractual reasons and when the Group has an enforceable right to payment from the
customers for performance completed to date, the Group recognises revenue as the
performance obligation is satisfied over time in accordance with the input method for
measuring progress.
For the six months ended 30 June 2018 , the Group has assessed and considered that
there is an enforceable right to payment from the customers for performance
completed to date for certain properties, but the Group considered that the adoption of
HKFRS 15 did not have a material impact on the timing of revenue recognition.
For contracts where the period between the payment by the customer and the transfer
of the promised property or service exceeds one year, the transaction price and the
amount of revenue from the sales of completed properties is adjusted for the effects of
a financing component , if significant. For the six months ended 30 June 2018, the
Group has assessed and considered that the financing component effect is insignificant.
Presentation of assets and liabilities related to contracts with customers
The excess of cumulative revenue recognised in profit or loss over the cumulative
billings to purchasers of properties is recognised as contract assets. The contract assets
will be reclassified as receivables when the progress billings are issued or properties
are delivered as this is the point in time that the consideration is unconditional because
only the passage of time is required before the payment is due.
Under HKFRS 15, the incremental costs of obtaining a contract and the costs directly
related to fulfilling a contract, such as sales commissions, are capitalised as contract
assets.
Under HKFRS 15, contract liabilities for progress billing recognised in relation to
property development activities were previously presented as advanced proceeds
received from customers.
18
3 Segment information
The executive directors of the Company, which are the chief operating decision-maker of
the Group, review the Group’s internal reporting in order to assess performance and allocate
resources. Management has determined the operating segments based on reports reviewed
by the executive directors of the Company that are used to make strategy decision.
The Group is organised into five business segments: property development, property
management, hotel operations, property investment and others. Associates and joint
ventures of the Group are principally engaged in property development and are included in
the property development segment. As the executive directors of the Company consider
most of the Group’s consolidated revenue and results are attributable from the market in
the PRC, most of the non-current assets are located in the PRC, and less than 10% of the
Group’s consolidated assets are located outside the PRC, geographical segment information
is not considered necessary.
The executive directors of the Company assess the performance of the operating segments
based on a measure of segment results, being profit before income tax before deducting
finance costs.
Segment results for the six months ended 30 June 2018 and 2017 are as follows:
Six months ended 30 June 2018
Property Property Hotel Property development management operations investment Others Group
(RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) Gross segment sales 22,552,110 1,405,693 361,946 93,232 280,687 24,693,668 Inter-segment sales - (487,888) - - - (487,888) ────── ────── ───── ────── ───── ────── Sales to external customers 22,552,110 917,805 361,946 93,232 280,687 24,205,780
Timing of revenue recognition - At a point in time 22,104,223 - - - - 22,104,223 - Over time 447,887 917,805 361,946 93,232 280,687 2,101,557 ────── ────── ───── ────── ───── ────── Fair value gains on investment
properties (note 10) - - - 21,663 - 21,663 ────── ────── ───── ────── ───── ────── Operating profit/(loss) 10,049,825 425,157 (76,423) 59,025 116,069 10,573,653 Share of post-tax gains of associates 48,418 - - - - 48,418
Share of post-tax losses of joint ventures (99,163) - - - - (99,163)
────── ────── ───── ───── ───── ────── Segment result 9,999,080 425,157 (76,423) 59,025 116,069 10,522,908 ────── ────── ───── ───── ───── ────── Finance cost, net (note 6) (853,269) Profit before income tax 9,669,639 Income tax expenses (note 7) (5,389,298) ────── Profit for the period 4,280,341 ══════ Depreciation 45,227 4,751 150,204 - 16,093 216,275 Amortisation of land use rights
and intangible assets 9,213 9,549 24,332 - 1,143 44,237 Write-down of completed
properties held for sale and properties under development 176,102 - - - - 176,102
══════ ══════ ═════ ══════ ═════ ═════
19
3 Segment information (continued)
Six months ended 30 June 2017
Property Property Hotel Property development management operations investment Group (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) Gross segment sales 21,332,452 692,193 334,485 99,759 22,458,889 Inter-segment sales - (144,119) - - (144,119) ────── ────── ───── ────── ────── Sales to external customers 21,332,452 548,074 334,485 99,759 22,314,770 Timing of revenue recognition - At a point in time 21,332,452 - - - 21,332,452 - Over time - 548,074 334,485 99,759 982,318 ────── ────── ───── ────── ────── Fair value gains on investment
properties (note 10) - - - 27,990 27,990 ────── ────── ───── ────── ────── Operating profit/(loss) 6,730,247 160,494 (66,432) 38,997 6,863,306 Share of post-tax losses of
associates (23,205) - - - (23,205) Share of post-tax losses of joint
ventures (73,357) - - - (73,357) ────── ────── ───── ───── ──────
Segment result 6,633,685 160,494 (66,432) 38,997 6,766,744 ────── ────── ───── ───── ────── Finance costs, net (note 6) (298,696) ────── Profit before income tax 6,468,048 Income tax expenses (note 7) (4,161,956) ────── Profit for the period 2,306,092 ══════ Depreciation 45,367 4,153 183,667 - 233,187 Amortisation of land use rights
and intangible assets 8,861 712 34,409 - 43,982 ══════ ══════ ═════ ══════ ══════
Segment assets and liabilities and capital expenditure as at 30 June 2018 are as follow:
Property Property Hotel Property development management operations investment Others Elimination Group (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) Segment assets 166,852,701 6,427,742 8,778,461 5,755,346 2,418,315 (1,992,443) 188,240,122 ─────── ────── ────── ────── ────── Unallocated assets 8,659,923 ─────── Total assets 196,900,045 ═══════ Segment assets
include: Interests in associates 624,639 - - - - - 624,639 Interests in joint
ventures 7,278,884 - - - - - 7,278,884 ═══════ ══════ ═════ ══════ ══════ ═══════ Segment liabilities 49,845,584 1,235,386 4,072,698 18,036 963,070 (1,992,443) 54,142,331 ─────── ────── ────── ────── ────── Unallocated
liabilities 90,512,718 ─────── Total liabilities 144,655,049 ═══════ Capital expenditure 261,949 17,436 3,525 - 144,818 - 427,728 ═══════ ══════ ══════ ══════ ══════ ═══════
20
3 Segment information (continued)
Segment assets and liabilities and capital expenditure as at 31 December 2017 are as follow:
There are no differences from the latest annual financial statements in the basis of
segmentation or in the basis of measurement of segment profit or loss.
Inter-segment transfers or transactions are entered into at terms and conditions agreed upon
by respective parties.
Eliminations comprise inter-segment trade and non-trade balances.
Pricing policy for inter-segment transactions is determined by reference to market price.
Segment assets consist primarily of property, plant and equipment, land use rights,
properties under development, completed properties held for sale, investment properties,
receivables, contract assets and cash balances. Unallocated assets comprise deferred income
tax assets, prepaid income taxes and financial assets at fair value through profit or loss.
Segment liabilities comprise operating liablities. Unallocated liabilities comprise taxation,
borrowings and derivative financial instruments.
Capital expenditure comprises additions to property, plant and equipment, land use rights
for self-owned properties, investment properties and intangible assets.
Property Property Hotel Property development management operations investment Others Elimination Group (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000) Segment
assets 142,059,581 2,498,963 8,813,269 5,886,604 1,457,382 (1,802,928) 158,912,871
─────── ────── ────── ────── ────── Unallocated
assets 4,444,795 ─────── Total assets 163,357,666 ═══════ Segment
assets include:
Interests in associates 567,221 - - - - - 567,221
Interests in joint ventures 6,438,514 - - - - - 6,438,514
════════ ══════ ══════ ══════ ══════ ═══════ Segment
liabilities 38,968,256 952,375 4,174,525 33,502 399,193 (1,802,928) 42,724,923
──────── ────── ────── ────── ────── Unallocated
liabilities 76,456,513 ─────── Total
liabilities 119,181,436 ═══════ Capital
expenditure 74,857 29,564 145,301 19,432 274,978 - 544,132 ════════ ══════ ══════ ══════ ══════ ═══════
21
4 Other gains/ (losses), net
Six months ended 30 June
2018 2017
(RMB’000) (RMB’000)
Fair value (losses)/gains on financial assets at fair
value through profit or loss (36,047) 5,919
Gain on disposal of financial assets at FVPL 14,966 -
Dividend income of financial assets at FVPL 124,441 -
Fair value gains on investment properties 21,663 27,990
Gain on disposal of property, plant and equipment 13,366 32,090
Exchange gains/(losses), net (note(a)) 147,569 (70,284)
Miscellaneous 28,386 (44,726)
314,344 (49,011)
Note:
(a) Amounts mainly represent the losses or gains of translation of financial assets and liabilities, which are
denominated in foreign currency into RMB at the prevailing period-end exchange rate. It does not include
the exchange gains or losses related to borrowings which are included in the finance costs, net (note 6).
5 Other income
Six months ended 30 June
2018 2017
(RMB’000) (RMB’000)
Interest income 282,084 146,086
Forfeited deposits from customers 9,422 16,338
Miscellaneous 81,411 76,535
372,917 238,959
6 Finance costs, net
Six months ended 30 June
2018 2017
(RMB’000) (RMB’000)
Interest expense:
- Bank borrowings, syndicated loans and other borrowings 1,476,214 792,953
- Senior notes 184,456 461,383
- PRC corporate bonds and ABS 437,117 262,684
Less: interest capitalised (1,734,833) (994,807)
Exchange losses / (gains) from borrowings 441,124 (461,022)
Less: exchange losses capitalised (134,962) -
Losses in fair value of derivative financial instruments 184,153 237,505
853,269 298,696
22
7 Income tax expenses
Six months ended 30 June
2018 2017
(RMB’000) (RMB’000)
Current income tax
- PRC corporate income tax 2,052,292 1,273,867
- PRC land appreciation tax 3,142,903 2,493,349
- PRC withholding income tax 141,276 426,561
- Hong Kong profits tax 2,469 -
Deferred income tax
- PRC corporate income tax 61,521 (31,821)
- Hong Kong profits tax (11,163) -
5,389,298 4,161,956
PRC corporate income tax
The income tax provision of the Group in respect of operations in Mainland China has been
calculated at the applicable tax rate on the estimated assessable profits for the period, based
on the existing legislation, interpretations and practices in respect thereof.
The corporate income tax rate applicable to the Group entities located in Mainland China is
25% according to the Corporate Income Tax Law of the PRC (the “ CIT Law”) effective on
1 January 2008.
PRC land appreciation tax
PRC land appreciation tax is levied at progressive rate ranging from 30% to 60% on the
appreciation of land value, being the proceeds from sales of properties less deductible
expenditures including land use rights and expenditures directly related to property
development activities.
PRC withholding income tax
According to the CIT Law, starting from 1 January 2008, a withholding tax of 10% will be
levied on the immediate holding companies outside the PRC when their PRC subsidiaries
declare dividend out of profits earned after 1 January 2008. A lower 5% withholding tax rate
may be applied when the immediate holding companies of the PRC subsidiaries are
established in Hong Kong and fulfil requirements under the tax treaty arrangements between
the PRC and Hong Kong.
Hong Kong profits tax
Except for the fair value gains and the disposal gain of financial assets at fair value through
profit or loss which subject to the profits tax rate of 16.5%, no other provision for Hong
Kong profits tax has been made in the consolidated financial statements. The remaining
profit of the group entities in Hong Kong is mainly derived from dividend income and
interest income of bank deposits, which are not subject to Hong Kong profits tax.
23
8 Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to shareholders of
the Company by the weighted average number of ordinary shares in issue during the period
less shares held for Share Award Scheme.
Six months ended 30 June
2018 2017
Profit attributable to shareholders of the Company (RMB’000) 3,758,948 1,858,688
Weighted average number of ordinary shares in issue less
shares held for Share Award Scheme (thousands) 3,882,578 3,882,578
Basic earnings per share (RMB per share) 0.968 0.479
Diluted earnings per share is calculated by adjusting the weighted average number of
ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.
For the six months ended 30 June 2018 and 30 June 2017, there was no diluted potential
ordinary share, diluted earnings per share equalled to basic earnings per share.
9 Dividend
A final dividend in respect of 2017 of HK$0.68 per ordinary share, approximately
HK$2,663,592,000 (equivalent to RMB2,160,547,000) was declared at the Annual General
Meeting of the Company on 14 May 2018, of which HK$23,440,000 (equivalent to RMB
19,634,000) was declared for shares held by Share Award Scheme. The final dividend has
been distributed out of the Company’s retained earnings.
An interim dividend in respect of the six months ended 30 June 2018 of HK$0.50 per
ordinary share, approximately HK$1,958,524,000 (equivalent to RMB1,697,844,000) was
declared by the Board of Directors of the Company (2017 : RMB740,881,000).
10 Investment properties
Six months ended 30 June
2018 2017
(RMB’000) (RMB’000)
Opening net book amount 5,886,604 6,326,943
Additions - 10,039
Disposals - (39,135)
Transfer to property, plant and equipment (152,921) (102,064)
Fair value gains on investment properties 21,663 27,990
Closing net book amount 5,755,346 6,223,773
Notes:
As at 30 June 2018, investment properties of RMB4,452,166,000 (31 December 2017: RMB4,593,324,000)
and certain rights of receiving rental income were pledged as collateral for the Group’s bank borrowings.
24
11 Trade and other receivables
30 June
2018
31 December
2017
(RMB’000) (RMB’000)
Trade receivables (note(a)) 7,004,851 6,664,759
Less: allowance for impairment of trade receivables (34,826) (7,443)
Total trade receivables 6,970,025 6,657,316
Other receivables due from:
- Joint ventures 10,771,962 5,416,625
- Associates 4,444,371
2,625,524
- Other related party 190,000
190,000
- Third parties 9,213,270
5,799,250
Prepaid valued-added taxes and other taxes 1,871,853
657,806
Deposits for acquisition of land use rights 1,227,165
1,224,012
Prepayments 512,231
374,765
Total other receivables 28,230,852 16,287,982
Less: allowance for impairment of other receivables (2,540) (1,256)
Total other receivables - Net book value 28,228,312 16,286,726
Less: other receivables due from the associate and joint
ventures - non-current portion (13,418,487) (6,547,559)
Other receivables - current portion 14,809,825 9,739,167
As at 30 June 2018, the fair value of trade and other receivables approximated their carrying
amounts.
Note:
(a) Trade receivables mainly arose from sales of properties. Trade receivables in respect of sale of
properties are settled in accordance with the terms stipulated in the sale and purchase agreements.
As at 30 June 2018 and 31 December 2017, the ageing analysis of the trade receivables based on
invoice date is as follows:
30 June
2018
31 December
2017
(RMB’000) (RMB’000)
Up to 3 months 5,088,235
4,268,721
3 months to 1 year 1,589,059
2,231,705
Over 1 year 327,557
164,333
7,004,851 6,664,759
25
12 Trade and other payables
30 June
2018
31 December
2017
(RMB’000) (RMB’000)
Trade payables (note(a)) 14,051,914 13,778,090
Other payables due to:
- Related parties 2,594,084 3,386,339
- Third parties 4,671,733 2,282,098
Staff welfare benefit payable 203,534 583,285
Accruals 1,877,219 1,567,254
Other taxes payable 1,876,797 1,666,886
25,275,281 23,263,952
Note:
(a) The ageing analysis of trade payables of the Group based on invoice date as at 30 June 2018 and
31 December 2017 is as follows:
30 June
2018
31 December
2017
(RMB’000) (RMB’000)
Up to 3 months 9,980,611
11,550,349
3 months to 6 months 2,257,877
1,731,714
6 months to 1 year 1,366,270
391,199
Over 1 year 447,156
104,828
14,051,914 13,778,090
26
MANAGEMENT DISCUSSION AND ANALYSIS
Overall performance
During the Review Period, the Group’s revenue was RMB24,206 million, representing an
increase of 8.5% when compared with RMB22,315 million in the corresponding period of 2017.
The operating profit was RMB10,574 million, representing an increase of 54.1% when compared
with RMB6,863 million in the corresponding period of 2017. Profit attributable to shareholders
of the Company was RMB3,759 million, representing an increase of 102.2% when compared
with RMB1,859 million in the corresponding period of 2017.
Land bank
The Group continued to adopt proactive yet prudent land replenishment strategy in response to
the market conditions. As at 30 June 2018, the Group had a land bank with a total planned GFA
of 35.40 million sq.m. in 69 cities and districts located in Southern China Region, Eastern China
Region, Western China Region, Central China Region, Hainan and Yunnan Region, Northeast
China Region, Northern China Region, Hong Kong and Overseas. The average land cost was
RMB2,744 per sq.m., which was competitive.
During the Review Period, the Group was dedicated to expanding its nationwide presence
through strategically acquiring 30 new land parcels successively in multiple city clusters by
means of tender, auction, listing-for-sale and acquisition, with an estimated total planned GFA
of 5.57 million sq.m., of which the Group’s total attributable planned GFA was 4.63 million
sq.m.. The consideration payable was RMB20,300 million.
The following table sets forth the details of the newly acquired land parcels:
Land Parcel Name City/District
Attributable
Interest
(%)
Total Planned
GFA
(sq.m.)
Southern China Region
Site A in Xincheng Town Yunfu 50 360,539
Site B in Xincheng Town Yunfu 50 132,222
Site in Shishan Town Foshan/Nanhai 100 88,342
Site in Sanfeng Village Meizhou 50 116,412
Site in Chaoyang District Shantou 100 351,869
Site in Taicheng New District South Jiangmen/Taishan 100 146,026
Site in Gaoming District Foshan/Gaoming 50 243,407
27
The following table sets forth the details of the newly acquired land parcels: (continued)
Land Parcel Name City/District
Attributable
Interest
(%)
Total Planned
GFA
(sq.m.)
Eastern China Region
Site in Mawei District Fuzhou 100 56,254
Site in Nanhu District Jiaxing 100 120,048
Site in Fenghuang Development Zone Huzhou 100 134,862
Site in Chongchuan District Nantong 100 41,500
Site in Binhu District Wuxi 100 43,180
Site in Tongshan District Xuzhou 34 177,038
Site in Gaoxin District Lianyungang 33 113,185
Site in Luyang District Hefei 49 174,164
Site in Yijiang District Wuhu 60 190,930
Site in Zhangqiu District Jinan 33 38,170
Site in Changqing District Jinan 100 180,687
Western China Region
Site in Hantai District Hanzhong 100 1,243,837
Site in Xinping Town Chengdu 100 139,999
Site in Wujin Street Chengdu 100 165,023
Central China Region
Site in Yuanda Road 2 Changsha 100 69,596
Site in Wude Road Jingzhou 100 147,395
Site in Longhu Town Zhengzhou 100 156,566
Site in Dongcheng District Xuchang 100 244,920
Site in Weidu District Xuchang 100 41,274
Site in Suiyang District Shangqiu 49 163,674
Site in Riyue Lake New District Shangqiu 100 157,816
Northern China Region
Site in Yuci District Jinzhong 33 163,112
Site in Haijiao Garden Tianjin 100 128,532
Site in Congtai District Handan 100 36,480
28
Property development and sales
During the Review Period, the revenue from recognised sales of property development of the
Group was RMB22,552 million, representing an increase of 5.7% when compared with
RMB21,332 million in the corresponding period of 2017. The total recognised GFA sold was
1.82 million sq.m., representing a decrease of 9.2% when compared with the corresponding
period of 2017. The recognised average selling price increased by 16.4% to RMB12,396 per
sq.m. in the first half of 2018 from RMB10,651 per sq.m. in the first half of 2017.
Property management
During the Review Period, revenue from property management of the Group was RMB918
million, representing an increase of 67.5% when compared with RMB548 million in the
corresponding period of 2017. Operating profit from property management business was
RMB425 million, representing an increase of 164.9% when compared with RMB160 million in
the corresponding period of 2017. The growth was mainly attributable to an increase in the total
contracted GFA under management to 109.1 million sq.m. (in the corresponding period of 2017:
71.44 million sq.m.). The average unit price of management fee increased from RMB2.97 per
sq.m. to RMB3.02 per sq.m.
Hotel operations
During the Review Period, revenue from hotel operations of the Group was RMB362 million,
representing an increase of 8.2% when comparable with RMB334 million in the corresponding
period of 2017. It was primarily attributable to the revenue generated from Shanghai Marriott
Hotel City Centre, Raffles Hainan, Sheraton Bailuhu Resort Huizhou and Howard Johnson Agile
Plaza Chengdu.
Property investment
During the Review Period, revenue from property investment of the Group was RMB93 million,
representing a decrease of 6.5% when compared with RMB100 million in the corresponding
period of 2017. The decrease was mainly due to certain properties were transferred from
investment properties to property, plant and equipment.
Cost of sales
During the Review Period, cost of sales of the Group was RMB12,188 million, representing a
decrease of 12.9% when compared with RMB13,991 million in the corresponding period of 2017.
The decrease was mainly due to the decrease in the total recognized GFA sold of 9.2% to 1.82
million sq.m when compared with the corresponding period of 2017, which in turn led to the
decrease in the cost of property sales.
29
Gross profit
During the Review Period, gross profit of the Group was RMB12,018 million, representing an
increase of 44.4% when compared with RMB8,324 million in the corresponding period of 2017.
During the Review Period, gross profit margin of the Group was 49.6%, representing an increase
of 12.3 percentage points when compared with 37.3% in the corresponding period of 2017. The
increase in gross profit margin was mainly attributable to the higher recognised average selling
price of propertites and increased weightings by projects with higher profitability.
Other gains/(losses), net
During the Review period, the other gains, net of the Group was RMB314 million. compared
with other losses, net of RMB0.49 million in the corresponding period of 2017. The other gains,
net mentioned above mainly included the net exchange gains of RMB148 million incurred by
translation of foreign currency denominated financial assets and liabilities (except borrowings)
into RMB at the prevailing period-end exchange rate and the dividend income of financial assets
of RMB124 million.
Other income
During the Review Period, other income of the Group was RMB373 million, representing an
increase of 56.1% when compared with RMB239 million in the corresponding period of 2017,
which was mainly due to the increase of interest income from bank deposits.
Selling and marketing costs
During the Review Period, selling and marketing costs of the Group recorded was RMB1,031
million, representing an increase of 25.3% when compared with RMB823 million in the
corresponding period of 2017, which was in line with the increase of property sales of the Group.
Administrative expenses
During the Review Period, administrative expenses of the Group was RMB1,047 million,
representing an increase of 41.7% when compare with RMB739 million in the corresponding
period of 2017, which was mainly attributable to the increase in the number of employees as a
result of business expansion of the Group.
Other expenses
During the Review Period, other expenses of the Group was RMB54 million, representing a
decrease of RMB35 million when compared with RMB89 million in the corresponding period
of 2017, which was mainly attributable to the decrease of charitable donations of the Group.
30
Finance costs, net
The Group’s finance costs mainly consists of interest expenses on bank borrowings, syndicated
loans, other borrowings, senior notes, PRC corporate bonds and ABS less capitalised interests,
gains recorded or losses incurred by foreign currency denominated borrowings and changes in
fair value of derivative financial instruments. Interest on borrowings relating to project
development is capitalised to the extent it is directly attributable to a particular project and used
to finance the development of that project.
During the Review Period, the Group recorded net finance costs of RMB853 million,
representing an increase of 185.7% when compared with RMB299 million in the corresponding
period of 2017, which was mainly due to the devaluation of Renminbi, causing the exchange
losses of RMB441 million on translation of the Group’s borrowings denominated in foreign
currencies, when compared with the exchange gains of RMB461 million in the corresponding
period of 2017.
Besides, interest expenses net of the portion being capitalised in properties development
amounted to RMB363 million, representing a decrease of 30.5% when compared with RMB522
million in the corresponding period of 2017. The decrease was mainly due to the increase of
capitalisation of interest expenses related to construction properties, which is consistent with the
increase of the projects under construction.
Share of post-tax gains/(losses) of associates
During the Review Period, the share of post-tax gains of associates was RMB48 million when
compared with share of post-tax losses of RMB23 million in the corresponding period of 2017.
Share of post-tax losses of joint ventures
During the Review Period, the Group recorded share of post-tax losses of joint ventures was
RMB99 million, representing an increase of 35.2% when compared with the corresponding
period of 2017.
Profit attributable to shareholders
During the Review Period, profit attributable to shareholders of the Group was RMB3,759
million, representing an increase of 102.2% when compared with RMB1,859 million in the
corresponding period of 2017, the increase was mainly attribute to the increase of revenue from
property development and sales, the average selling price and the gross profit margin.
31
Liquidity, financial and capital resources
Cash position and fund available
As at 30 June 2018, the total cash and bank balances of the Group were RMB29,508 million (31
December 2017: RMB30,120 million), comprising cash and cash equivalents of RMB18,173
million (31 December 2017: RMB19,042 million) and restricted cash of RMB11,335 million (31
December 2017: RMB11,078 million).
Some of the Group’s project companies are required to place a certain amount of pre-sale
proceeds in designated bank accounts as guarantee deposits for construction of the relevant
properties.
As at 30 June 2018, the Group’s undrawn borrowing facilities were RMB6,467 million (31
December 2017: RMB8,605 million).
Borrowings
As at 30 June 2018, the Group’s total borrowings amounted to RMB75,308 million, of which
bank borrowings and other borrowings, senior notes, PRC corporate bonds and asset-backed
securities (“ABS”) amounted to RMB55,031 million, RMB4,580 million and RMB15,697
million respectively.
Repayment schedule
As at
30 June
2018
(RMB million)
As at
31 December
2017
(RMB million)
Bank borrowings and other borrowings
Within 1 year 25,260 22,956
Over 1 year and within 2 years 7,357 6,962
Over 2 years and within 5 years 16,929 8,835
Over 5 years 5,485 5,600
Subtotal 55,031 44,353
Senior notes
Over 1 year and within 2 years 3,278 -
Over 2 years and within 5 years 1,302 4,515
Subtotal 4,580 4,515
PRC corporate bonds and ABS
Within 1 year 4,596 4,190
Over 1 year and within 2 years 4,783 6,369
Over 2 years and within 5 years 6,318 2,248
Subtotal 15,697 12,807
Total 75,308 61,675
32
As at 30 June 2018, the Group’s bank borrowings (including syndicated loans) of RMB34,964
million (31 December 2017: RMB23,926 million) and other borrowings of RMB6,994 million
(31 December 2017: RMB7,057 million) were secured by its bank deposits, land use rights, self-
used properties, completed properties held for sale, properties under development, investment
properties, the shares of subsidiaries and equity interest. The senior notes were guaranteed by
certain subsidiaries of the Group and were secured by the pledges of their shares. The net assets
of these subsidiaries were RMB1,713 million as at 30 June 2018 (31 December 2017: RMB1,867
million).
The gearing ratio is the ratio of net borrowings (total borrowings less total cash and cash
equivalents and restricted cash) to total equity. As at 30 June 2018, the gearing ratio was 87.7%
(31 December 2017: 71.4%).
Currency risk
The Group conducts its business primarily in Renminbi. Certain bank deposits and bank loans
were denominated in Hong Kong dollars, United States dollars and Malaysian Ringgit, and the
Group’s certain senior notes and bank borrowings were mainly denominated in United States
dollars and Hong Kong dollars. Since early 2016, the Group has adopted a hedging policy and
entered into capped forward contracts to mitigate certain of its foreign currency exposure in
United States dollars and Hong Kong dollars denominated indebtedness and achieve better
management over foreign exchange risk. The objective of the arrangement is to minimise the
volatility of the RMB cost of highly probable forecast repayments of debts. Other than those
disclosed, the Group does not have any material exposures to foreign exchange fluctuations.
Cost of borrowings
During the Review Period, the total cost of borrowings of the Group was RMB2,098 million,
representing an increase of RMB581 million when compared with RMB1,517 million in
corresponding period of 2017. The increase was mainly attributable to higher average balance of
borrowings during the Review Period. Taking into consideration of exchange differences arising
from foreign currencies borrowings, the Group’s effective borrowing rate for the period was
6.75% (In 2017: 6.35%).
Financial guarantee
The Group has cooperated with certain financial institutions to arrange mortgage loan facility for
its purchasers of property and provided guarantees to secure obligations of such purchasers for
repayments. As at 30 June 2018, the outstanding guarantees amounted to RMB45,328 million
(31 December 2017: RMB38,571 million). Such guarantees will be discharged upon earlier of (i)
issuance of the real estate ownership certificate which will generally be available within one year
after the purchasers taking possession of the relevant property; and (ii) the satisfaction of relevant
mortgage loans by the purchasers.
Pursuant to the terms of the guarantees, upon default in mortgage payments by these purchasers,
the Group is responsible for repaying the outstanding mortgage principals together with any
accrued interests and penalties owed by the defaulted purchasers to the banks, and the Group is
entitled to take over the legal title and possession of the related properties. The Group’s guarantee
starts from the dates the mortgagees grant the mortgage loans. No provision has been made for
the guarantees as the management is of the view that the net realisable value of the related
properties can cover the repayment of the outstanding mortgage principals together with the
accrued interests and penalties in case of default in payments.
33
The Company and the other three PRC real estate developers have provided certain guarantees
in respect of loan facilities granted to Li He of amounting to RMB1,980 million (31 December
2017: RMB2,480 million), the Group’s share of the guarantee amounted to RMB456 million (31
December 2017: RMB496 million). Several subsidiaries of the Group and joint venture parties
have provided certain guarantees in proportion to their shareholdings in certain joint ventures in
respect of loan facilities amounting to RMB10,863 million (31 December 2017: RMB5,473
million). The Group’s share of the guarantees amounted to RMB5,807 million (31 December
2017: RMB1,566 million).
Commitments
As at 30 June 2018, the commitments of the Group in connection with the property development
activities were RMB26,890 million (31 December 2017: RMB23,773 million). The Group has
also committed to pay outstanding land premium resulting from land acquisitions in the amount
of RMB11,357 million (31 December 2017: RMB6,430 million).
Significant Investments Held, Material Acquisitions and Disposals of Subsidiaries,
Associates and Joint Ventures, and Future Plans for Material Investments or Capital
Assets
Save as disclosed in this announcement, there were no other significant investments held, no
material acquisitions or disposals of subsidiaries, associates and joint ventures during the period,
nor was there any plan authorised by the Board for other material investments or additions of
capital assets at the date of this announcement.
Employees and remuneration policy
As at 30 June 2018, the Group had a total of 20,701 employees, among which 318 were senior
management and 1,464 were middle management. By geographical locations, there were 20,593
employees in mainland China and 108 employees in Hong Kong and Malaysia. For the six
months ended 30 June 2018, the total remuneration costs, including directors’ remuneration,
were RMB1,413 million (in the corresponding period of 2017: RMB745 million).
The Group remunerates its employees is reference to the market levels, individual performance
and contributions. Bonuses are also distributed based on the performance of employees. The
Group also provides a comprehensive benefit package and career development opportunities,
including retirement schemes, medical benefits, and both internal and external training
appropriate to the employees’ needs.
Outlook
Looking ahead, the Group will further implement the business model of “focusing on property
development, supported by a diversified range of businesses” and make all efforts to carry out
its “Three-year Plan” in the second half of 2018, with an aim to drive the development of each
of its business segments to the fullest extent.
In respect of property development business, the Group will capitalise on market opportunities
to achieve continuous development and launch projects in a timely manner. The Group will also
endeavour to meet its full-year pre-sales target by improving the quality of its products,
increasing operational efficiency and improving its staff training system.
In respect of property management business, the Group will further increase the GFA under
management and boost revenue from operations through full-range market expansion,
investment, M&A and joint venture cooperation.
34
In respect of environmental protection business, the Group will be committed to speed up the
acquisition of well-established and quality projects with stable operating revenue, further
enhance its project capacity and facilitate project development, so as to drive its revenue and
profit growth.
In respect of education business, the Group will actively drive the construction of new schools,
with a view to enhancing value of property projects.
In respect of construction business, the Group will continue to drive the growth of general
construction contracting business and further enhance the quality of design and services. While
delivering support to the property development business, the Group will accelerate business
diversification.
In respect of real estate construction management business, the Group will strategically expand
into Tier-1 and Tier-2 cities, with an aim to creating more profit growth points.
In respect of commercial business, the Group will further enhance its internal management
capabilities, strengthen the control of costs and expenses, speed up the revenue growth of new
businesses and make all efforts to drive the business diversification.
The Group is fully confident in the future development of Mainland China and the Company. In
face of the fast-changing economic and market environment, the Group will remain vigilant in
peacetime as always. The Group will continue to drive the diversified development of the
Company, with a view to creating greater value for customers, shareholders, employees and
society.
35
INTERIM DIVIDEND
The Board has declared an interim dividend of HK50.0 cents (2017: HK22.0 cents) per ordinary
share payable in cash to shareholders of the Company. Interim dividend will be payable on or
about Thursday, 27 September 2018 to the shareholders whose names appear on the register of
members of the Company on Wednesday, 19 September 2018.
CLOSURE OF REGISTER OF MEMBERS
The Company’s register of members will be closed from Monday, 17 September 2018 to
Wednesday, 19 September 2018 (both days inclusive), during such period no transfer of shares
will be effected. To qualify for the interim dividend, all properly completed transfer forms
accompanied by the relevant share certificates must be lodged with the Company’s branch share
registrar and transfer office in Hong Kong, Tricor Investor Services Limited, at Level 22,
Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration not later than 4:30 p.m.
on Friday, 14 September 2018.
REVIEW OF ACCOUNTS
The Company’s audit committee has reviewed the interim results of the Group for the six months
ended 30 June 2018.
The interim results of the Group for the six months ended 30 June 2018 has not been audited but
has been reviewed by PricewaterhouseCoopers, the auditor of the Company, in accordance with
Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information
Performed by the Independent Auditor of the Entity” issued by the Hong Kong Institute of
Certified Public Accountants.
COMPLIANCE WITH THE MODEL CODE FOR SECURITIES
TRANSACTIONS BY DIRECTORS
The Company has adopted its own code for securities transactions by directors (“Securities
Dealing Code for Directors”), which is on terms no less exacting than the required standard as
set out in the Model Code for Securities Transactions by Directors of Listed Issuers as set out in
Appendix 10 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong
Kong Limited (the “Stock Exchange”) (“Listing Rules”). In response to enquiries made, all
Directors confirmed that they have complied with the Securities Dealing Code for Directors
during the six months ended 30 June 2018.
COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
During the six months ended 30 June 2018, the Company has complied with all code provisions
of the Corporate Governance Code and Corporate Governance Report (“Corporate Governance
Code”) contained in Appendix 14 to the Listing Rules except for the deviation as specified with
considered reasons below.
36
The code provision A.2.1 of the Corporate Governance Code requires that the roles of chairman
and chief executive should be separate and should not be performed by the same individual.
However, in view of the present composition of the Board, Chen Zhuo Lin’s in-depth knowledge
of the operations of the Group and of the industry, his extensive business network and
connections in the sector and the scope of operations of the Group, the Board believes that Chen
Zhuo Lin, in his dual capacity as the Chairman of the Board and President, will provide strong
and consistent leadership for the development of the Group. The Board also believes that this
structure is in the best interest of the Company and will not impair the balance of power and
authority of the Board and such arrangement will be subject to review from time to time.
PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES
On 3 May 2018, Guangzhou Panyu Agile Realty Development Co., Ltd. (廣州番禺雅居樂房地
產開發有限公司) (an indirect wholly-owned subsidiary of the Company incorporated in China)
repurchased all its outstanding domestic non-public corporate bonds in an aggregate principal
amount of RMB1,200 million due 2020 with a coupon rate of 5.8% at the repurchase price of
RMB100 each being the face value of such domestic corporate bonds.
Save as disclosed above, during the six months ended 30 June 2018, neither the Company nor
any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities.
PUBLICATION OF INTERIM RESULTS AND INTERIM REPORT ON
THE WEBSITES OF THE COMPANY, THE STOCK EXCHANGE AND
SINGAPORE EXCHANGE SECURITIES TRADING LIMITED
This announcement is published on the respective websites of the Company (www.agile.com.cn),
the Stock Exchange (www.hkex.com.hk) and Singapore Exchange Securities Trading Limited
(www.sgx.com). The interim report of the Company for the six months ended 30 June 2018
containing all the information required under the Listing Rules will be dispatched to the
Company’s shareholders and will be posted on the above websites in due course.
By Order of the Board
Agile Group Holdings Limited
CHEN Zhuo Lin
Chairman and President
Hong Kong, 29 August 2018
As at the date of this announcement, the Board comprises twelve members, being Mr. Chen Zhuo Lin*
(Chairman and President), Mr. Chan Cheuk Yin** (Vice Chairperson), Madam Luk Sin Fong, Fion**
(Vice Chairperson), Mr. Chan Cheuk Hung*, Mr. Huang Fengchao*, Mr. Chen Zhongqi*, Mr. Chan
Cheuk Hei**, Mr. Chan Cheuk Nam**, Dr. Cheng Hon Kwan#, Mr. Kwong Che Keung, Gordon#, Mr.
Hui Chiu Chung, Stephen# and Mr. Wong Shiu Hoi, Peter#.
* Executive Directors
** Non-executive Directors # Independent Non-executive Directors